Published in the Tahlequah Daily Press on April 5, 2017 PUBLIC NOTICE REQUIRED BY SECTION 25(e)(5) OF THE INTERNAL REVENUE CODE AND REGULATION 1.25-7T TO THE INTERNAL REVENUE CODE REGARDING QUALIFIED MORTGAGE CREDIT CERTIFICATE PROGRAM OF THE CHEROKEE COUNTY ECONOMIC DEVELOPMENT AUTHORITY This Public Notice is promulgated pursuant to the requirements of Section 25(e)(5) of the Internal Revenue Code of 1986, as amended (herein "Code") and Regulation 1.25-7T thereto. OVERVIEW OF MORTGAGE CREDIT CERTIFICATE PROGRAM The Cherokee County Economic Development Authority (herein "Authority") has authorized a Program for qualified home buyers within the County whereby such Authority will issue Qualified Mortgage Credit Certificates to such qualifying Home Buyers within the County which will enable them to receive an annual federal income tax credit with respect to their federal income taxes so long as the original mortgage is on the home and the Homeowner continues to live in the home for which the Mortgage Credit Certificate was issued. This tax credit is a dollar-for-dollar reduction in the qualifying Homeowner's federal income tax due, not just a deduction from gross income. An explanation of the eligibility requirements for this Mortgage Credit Certificate is contained within this notice and you should review it carefully to see if you qualify. AMOUNT OF QUALIFYING HOME BUYER'S FEDERAL INCOME TAX CREDIT A holder of a Mortgage Credit Certificate is entitled to a federal income tax credit equaling 50% of the interest paid on the first $40,000 of the holder's home loan (the “certified indebtedness”) as stated on the Mortgage Credit Certificate during the particular tax year in question (Code Sec. 25(a)(1). The Certificate holder is limited by Federal law to a maximum of $2,000 per year income tax credit (Section 25(a)(2(a)). Therefore for example if the homeowner paid $4,000 of interest on the first $40,000 of his/her home loan during the applicable tax year, then the home owner would receive an income tax credit of $2,000 (that is, 50% of the $4,000) and the home owner would thus pay $2,000 less in taxes than without the Mortgage Credit Certificate, subject to certain limitations. If a homeowner had a lower interest rate and paid for example $2,000 of interest on the first $40,000 of the holder’s home loan during the applicable tax year, then the homeowner would receive an income tax credit of $1,000 (that is 50% of the $2,000). The amount of tax credit will vary depending on the interest rate on each loan and is limited to 50% of the interest paid on the first $40,000 of the home loan which is the certified indebtedness amount and a maximum of $2,000 per year. See the certified indebtedness amount on each individual certificate. HOW AND WHERE TO APPLY FOR THE MORTGAGE CREDIT CERTIFICATE The Mortgage Credit Certificate Program is available to persons who are purchasing a home and obtaining a loan thereon for a house in the County which is to be used as his or her principal residence. Therefore, one should apply for the Program at the Mortgage Lender of the applicant's choice, however, such lending institution need not be located within the County. If the Mortgage Lender you contact does not have information concerning the Program, such information can be obtained by contacting MCC Administration Corporation at (405) 364-6565 or P.O. Box 1568, Norman, Oklahoma 73070. Therefore, a Home Buyer should contact a bank, savings and loan association or other mortgage lender to apply for a loan and work with the lending officer of such institution and the Program Administrator. Upon qualifying for a Mortgage Credit Certificate, such instrument will be issued by the Program Administrator. Thereafter, the Home Buyer will file a copy of the Certificate with IRS Form 8396 and IRS Form 1040. The Homeowner should thereafter be able to claim this credit every year as long as he or she lives in the home and is paying on the mortgage. DURATION OF THE MORTGAGE CREDIT CERTIFICATE PROGRAM Persons may obtain Mortgage Credit Certificates under the Program until December 31, 2019. Persons receiving MCC's may be required to rebate to the Federal Government a portion of the federal subsidy represented by such tax credit upon resale of the related residence within the first nine years of the loan. The MCC Program will remain until December 31, 2019, or until the maximum amount of MCC's available through the Program have been issued. FEATURES AND LIMITATIONS ON CREDIT A Mortgage Credit Certificate holder is allowed to take the tax credit each tax year, so long as he/she continues to live in the home for which the Mortgage Credit Certificate was issued. In addition to the tax credit, a Mortgage Credit Certificate holder is still able to take the standard mortgage interest deduction. That deduction is limited, however, to the mortgage interest paid during the year minus the amount of the tax credit for that year. For instance, if the Home Buyer paid $4,000 of mortgage interest on the certified indebtedness amount for the year and receives a $2,000 MCC tax credit, the taxpayer can also deduct $2,000 ($4,000-$2,000) of mortgage interest from gross income for the year. If a holder's tax liability is less than the amount of the credit for the year, it may be possible for the unused portion of the tax credit to be carried forward. COSTS OF MORTGAGE CREDIT CERTIFICATES The Homeowner must pay a one-time Mortgage Credit Certificate origination fee of $1,000 to the Program Administrator at the time of the closing of the loan. There will also be an annual Program administration fee of $180 per year, and collected by the Program Administrator on a monthly basis from the Homeowner. The annual fee of $180 is fixed for the first seven years of the loan, but may be increased annually thereafter by the Program Administrator but not to exceed 5% per year. ADDITIONAL FACTS ABOUT MORTGAGE CREDIT CERTIFICATES Before you decide to apply for a Mortgage Credit Certificate there are several features of Mortgage Credit Certificates that you should keep in mind. First, the tax credit is only available as long as you continue to live in the house financed in connection with the Mortgage Credit Certificate. You are required to notify the Program Administrator when you move and/or refinance your house. When you move, the Certificate is automatically revoked and you are no longer entitled to the tax credit. If you refinance your home, the Certificate will be revoked unless you make arrangements ahead of time with the Administrator to qualify the refinance for a reissuance of the Mortgage Credit Certificate. Call the Administrator for details. Second, a Mortgage Credit Certificate may be transferable. For information in regard to this, contact the Program Administrator before you sell the home. Third, if you make any misrepresentations about your eligibility for the Program you risk serious consequences. Your Mortgage Credit Certificate may be revoked as a result of the misrepresentation. Further, a misrepresentation may result in a fine of up to $10,000 in addition to any criminal penalties imposed by law. ELIGIBILITY REQUIREMENT OF THE MORTGAGE CREDIT CERTIFICATE PROGRAM In order to qualify for the Program, Federal Law requires that a Home Buyer satisfy each of the following guidelines: 1. First Time Home Buyer Requirement (The Three Year Requirement): The Program and federal law require that MCC's be issued only to "first time home buyers", unless the home lays within a "Targeted Area". All of Cherokee County has been established by HUD as a "Target Area". The First Time Home Buyer requirement does not apply in Cherokee County. 2. Targeted Area Set Aside Requirement: Since all of Cherokee County is a "Target Area", the set aside requirement does not apply. 3. Home Buyer Income Requirement: Federal law imposes a "family income" limit on homebuyers receiving MCC's. "Family income" is the anticipated total income from all sources received by the family head and spouse (even if temporarily absent) and by each additional member of the family, including salary and wages, as well as overtime, dividends, housing allowances, alimony, public assistance, social security, unemployment compensation and investment income and profits for the 12-month period beginning the date of the issuance of the MCC to the Home Buyer, exclusive of income that is temporary, nonrecurring or sporadic. An income work sheet making determination of "family income" which is signed by the Home Buyer is attached to and included within the sworn affidavit of the Home Buyer. The Program income limits are as follows: Target Area Family of 2 or less $ 69,720 Family of 3 or more $ 81,340 Up to 33 1/3% of the Certificates can be issued without regard to the income limits for the houses in Target Areas. These will be approved on a first come, first served basis by the Program Administrator. 4. Purchase Price: Federal Law imposes certain purchase price limitations. The maximum purchase price limitations are as follows: All of County New House $214,925 Existing House $214,925 5. Principal Residence: Federal Law requires that the Home Buyer must occupy the home as a principal residence within 60 days after the financing is provided. A principal residence is a home occupied primarily for residential purposes. A principal residence does not include a home used as an investment property, as a recreation home or a home 15% or more of the total area of which is used in a trade or business. Further, if the Home Owner ceases to use the residence as his principal residence for a period in excess of twelve (12) months, no credit shall be allowed for mortgage interest accruing after the first day in such twelve-month period. 6. Single Family Home: The residence financed must generally be a one-family residence. This includes a detached home, one unit of a duplex, a townhouse or condominium unit. Manufactured housing or mobile homes qualify only if the unit has at least 400 square feet of living space, if it is more than 102 inches wide, if it is permanently affixed to the real property and is not classified as personal property under Oklahoma law. Land adjoining the home is considered part of the home only if it maintains the home's livability and is not, other than incidentally, a source of income to the owner. The purchase price includes all amounts paid for the home including the cost of completion. For example, you may not agree to pay extra for a refrigerator or drapes so that the stated purchase price is low enough to qualify. The purchase price does not include legitimate settlement and financing costs or the value of the land if you have owned it for more than two years before beginning construction of the home. 7. New Mortgage: The mortgage loan financed in connection with issuance of a Mortgage Credit Certificate must be a new mortgage and may not replace a prior mortgage of the Certificate holder on the home (whether or not previously repaid). 8. Program Area: In order to be eligible for a Certificate, the home financed under the Program must be located within this County. 9. Prohibited Loans: Under the Program, any type of loan will qualify with two exceptions. First, a loan from a lender who is considered to be a "related person" to the Home Owner for tax purposes will not qualify. Second, a loan funded from the proceeds of a tax-exempt bond issue will not qualify. 10. First Come, First Served Nature of Program: Under the Program, Mortgage Credit Certificates will be issued to eligible Home Buyers on a first come, first served basis. Only loans closed on or after July 6, 2017, are eligible for the Program. MCC's must be issued by December 31, 2019. 11. Non-Discriminatory Nature of Program: The Program will be administered without regard to race, sex or national origin or other applicable Federal parameters prescribed by law relating to discrimination. For further information with respect to the Program, please contact a local mortgage lender, a local realtor or the Program Administrator: MCC Administration Corporation at (405) 364-6565, P.O. Box 1568, Norman, Oklahoma 73070. CHEROKEE COUNTY ECONOMIC DEVELOPMENT AUTHORITY By: s/s Chairman of Cherokee County Economic Development Authority
↧
